Trading credit spread is a often overlooked strategy that can
yield a steady flow of income. It is does not provide the massive
leverage of options buying, nor does it provide obsessive traders with
an opportunity to glare at screens, graphs and indicators day in and day
out. It is neither exciting or spectacular, but it is definitely not
risky and it certainly is a steady reliable way of building wealth. A
professionally executed credit spread selling program can safely turn
$1,000 into a million dollars within 4 years.
There are two basic credit spread strategies that a trader can use. Bull Put Spreads and Bear Call Spreads, both result in a upfront credit to the traders account, and profit is fully realized when the spread expires out of the money. The trader can profit from time and intrinsic value decay too.
Bull Put Spread- Bull Put Spread
A trader can use a Bull Put Spreads when a stock or index is trending upwards and we believe the price is going to increase. The trader is basically selling a put to a buyer and hedging the risk in case of a decrease in price of the stock. You want the spread to expire Out Of The Money to keep the premium you earned.
Bear Call Spread-bear-call-spread
This is the exact opposite of the Bull Put Spread. We use this strategy when we believe there is going to be a reversal in a up trending stock or when a stock is already down trending and we believe that this will continue. As with the Bull Put Spread we receive the premium right away and we want to have the spread expire Out Of The Money.
What are the advantages of credit spread trading?
It is short term - trades are typically less than thirty days in duration.
It is low risk - trades have a better than 90% of success. Most call and put options expire worthless, so why not profit from this.
You know exactly what the risk, return and profit will be before you enter a trade.
Market fluctuations are mostly irrelevant.
Simple technical analysis - Selling Credit spreads needs a very simple trend analysis procedure, which should not take longer than 15 minutes a day, and the ability to plan for upcoming events such as earnings reports.
Time spent in monitoring the trade is very low.
Profits range between 15% and 20% per month. Compounded, this leads to significant growth in a profile. Starting with $500 and gaining a steady but sure 20% per month, you can get your first million dollars in four years.
There are two basic credit spread strategies that a trader can use. Bull Put Spreads and Bear Call Spreads, both result in a upfront credit to the traders account, and profit is fully realized when the spread expires out of the money. The trader can profit from time and intrinsic value decay too.
Bull Put Spread- Bull Put Spread
A trader can use a Bull Put Spreads when a stock or index is trending upwards and we believe the price is going to increase. The trader is basically selling a put to a buyer and hedging the risk in case of a decrease in price of the stock. You want the spread to expire Out Of The Money to keep the premium you earned.
Bear Call Spread-bear-call-spread
This is the exact opposite of the Bull Put Spread. We use this strategy when we believe there is going to be a reversal in a up trending stock or when a stock is already down trending and we believe that this will continue. As with the Bull Put Spread we receive the premium right away and we want to have the spread expire Out Of The Money.
What are the advantages of credit spread trading?
It is short term - trades are typically less than thirty days in duration.
It is low risk - trades have a better than 90% of success. Most call and put options expire worthless, so why not profit from this.
You know exactly what the risk, return and profit will be before you enter a trade.
Market fluctuations are mostly irrelevant.
Simple technical analysis - Selling Credit spreads needs a very simple trend analysis procedure, which should not take longer than 15 minutes a day, and the ability to plan for upcoming events such as earnings reports.
Time spent in monitoring the trade is very low.
Profits range between 15% and 20% per month. Compounded, this leads to significant growth in a profile. Starting with $500 and gaining a steady but sure 20% per month, you can get your first million dollars in four years.
We have over 10 years experience trading various strategies.
Options credit spread trading is a often overlooked strategy by most
investors and traders. That's why we created this site, to share our
option picks with you, and help you on your path to becoming a better
trader.
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Weekly Options Picks- posted every Sunday before the week begins.
Monthly Option Picks- posted around the first week of the month.
Visit http://www.creditspreadmillionaire.com for more info and weekly option picks for our members. Register for free
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